One of the Tesla Model 3's biggest critics has changed his mind and now says the car could be profitable

Hollis Johnson/Business InsiderTesla CEO Elon Musk has said the Model 3 will earn around a 20% profit margin by the end of this year.

  • Munro & Associates, a Detroit-based engineering company that takes apart cars and evaluates their components, criticised how the TeslaModel 3 was assembled in April.
  • But after examining the car in more detail, Munro & Associates founder Sandy Munro said he thinks the Model 3 is profitable for Tesla, with the potential for each vehicle to bring the company more than a 30% margin, a figure that would exceed every other electric vehicle.
  • During Tesla’s first-quarter earnings call in May, CEOElon Musk said the Model 3 would earn around a 20% profit margin by the end of this year and a 25% margin in 2019.

One of the Tesla Model 3’s biggest early critics has changed his mind.

Munro & Associates, a Detroit-based engineering company that takes apart cars and evaluates their components, criticised how the vehicle was assembled in April, saying it was heavy for its size, had imprecise panel fits, and contained unnecessary and costly materials. At the time, the company complimented the vehicle’s battery and electronics.

After examining the car in more detail, Munro & Associates founder Sandy Munro said he thinks the Model 3 is profitable for Tesla, with each vehicle having the potential to bring the company more than a 30% margin, a figure that would exceed every other electric vehicle.

On the automotive program Autoline After Hours, Munro reaffirmed the company’s praise for the Model 3’s battery and electronics, calling the vehicle’s circuit board “a symphony of engineering.”

“I have to eat crow,” Munro said.

The Model 3 is Tesla’s first mass-market vehicle, designed to broaden the company’s customer base beyond the luxury segment and increase the rate of electric vehicle adoption. But Tesla struggled to ramp up production after it was launched in July 2017 due to excessive automation at its factories.

In May 2016, Musk said he estimated the company would make 100,000 to 200,000 Model 3s during the second half of 2017. Tesla made 2,685 Model 3 vehicles in 2017.

The company twice missed its self-imposed deadline to produce 5,000 Model 3s in a week, but hit that rate at the end of June. On July 2, the company said it had made 5,031 Model 3s during the final week of June and 28,578 during the second quarter, more than it had made in the prior three quarters combined.

The vehicle has put a strain on Tesla’s finances, as the company has posted significant losses in the quarters since it was launched. But Musk has said the company will become profitable in the second half of this year. During Tesla’s first-quarter earnings call in May, Musk said the Model 3 would earn around a 20% profit margin by the end of this year and a 25% margin in 2019.

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